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2020 (12) TMI 337 - AT - Income TaxRevision u/s 263 - A.O. has not verified the details of house property income offered by the assessee resulting in escapement of income - CIT set aside the assessment order and directed the A.O. to re-do the assessment bringing to tax the annual value of “1MG Mall” - assessee, along with two other co-owners, owns a shopping Mall named “1MG” located at M.G. Road, Bengaluru - HELD THAT:- Agreement entered by the assessee with M/s. Lido states that M/s. Lido would retain 2% of license fees/rent receipts and 75% of the other income, we notice that the A.O. has not examined the tax implication of the agreement in the context of section 23 & 24 of the Income tax Act, as the Mall income has been offered by the assessee under the head “Income from house property”. As rightly pointed out by Ld. D.R. the tax on income from house property is charged on the annual letting value and term “Annual letting value” has been defined u/s 23 of the Act. Further, the assessee is entitled to claim only those expense which are listed out in section 24 of the Act from the annual letting value determined u/s 23 of the Act. Admittedly, the A.O. did not examine any of the issues pointed out by the Ld. Principal CIT. A.R took support of the decision rendered in the case of Sunbeam Auto Ltd [2009 (9) TMI 633 - DELHI HIGH COURT] - We notice that the said decision was rendered prior to the insertion of Explanation 2 in sec. 263(1) by Finance Act, 2015 w.e.f. 1.6.2015. As per clause (a) of Explanation 2, the order passed without making inquiries or verification which should have been made shall be deemed to be erroneous and prejudicial to the interests of the revenue. Since the A.O. failed to examine these issues, in our view, the Ld. Principal CIT was justified in observing that there is lack of application of mind and hence the order is erroneous and prejudicial to the interest of the revenue, in the facts and circumstances of the case. A.R arguments on the concept of diversion of overriding title are not relevant while examining the validity of revision proceedings and the assessee may take these arguments before the AO, if so advised. Since the A.O. has not examined these issues on merits, we are of the view that the same need not be considered by the Tribunal while examining the validity of revision proceedings, unless it is shown that the view taken by Ld. Principal CIT is not totally sustainable in law. Accordingly, we decline to address the arguments advanced on merits. Principal CIT was justified in passing the impugned revision order. - Decided against assessee.
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